Pros, Cons: Along with con artists, unethical care-givers and thieves, those who prey upon the elderly include the grown children of victims, as in the case of Junior Hodgson.

Dad's Wallet

The thousands of retired people sitting in paid-for, million-dollar houses in Silicon Valley make easy targets for con artists and thieves, who are ripping them off in record numbers. Law enforcement is happy to help--but what kind of parent wants to put their own kids in jail?

By Loren Stein

WHEN JUNIOR HODGSON checked into Kaiser Hospital in late 1999 with a life-threatening case of pneumonia, he knew he could count on his daughter, Peggy Sue, to take care of things. After all, 32-year-old Peggy Sue Alaniz had been handling his finances for some time, living in his Milpitas home rent- and bill-free with her three kids.

At the time Hodgson was admitted to the hospital, doctors didn't gloss over the situation with the down-to-earth former mechanic, who was born and raised in the backwoods of North Carolina and worked for 25 years fixing rides at Great America. "They didn't think I was going to live," Hodgson says bluntly in his clipped Southern drawl.

Diagnosed with serious ulcers, he subsequently underwent a debilitating stomach surgery that required a four-month stay at Kaiser Hospital, followed by seven months of recuperation at Westgate Rehabilitation Center. It was many months before Hodgson's health--and spirits--began to lift.

But then Patrick Garcia, Hodgson's stepson, got a disturbing phone call: Westgate, with whom Hodgson had been on good terms, was suddenly threatening to kick him out because it was owed $12,000. Garcia discovered that Hodgson's mortgage hadn't been paid either, and his house was heading into foreclosure.

Credit card bills had been left unattended, and a mysterious spate of new credit card accounts had been opened under Hodgson's name. Bank of America also reported that in the first six months after Hodgson's hospitalization, 46 ATM withdrawals had been made from Hodgson's bank account. Then he discovered the final tip-off: daughter Peggy Sue Alaniz had written 36 checks to herself, totaling $15,000, from her father's account.

When Garcia first showed Hodgson the bank statements, the 65-year-old simply couldn't believe it. Alaniz was his daughter, his own flesh and blood, and Hodgson says they had always been close. "I don't know why she'd do something like that," he says. "When she was growing up, she was the only one who wouldn't ask me for anything. I thought she'd be the one I could depend on."

Garcia says he called Alaniz and told her, "Talk to your dad." Hodgson got on the phone and began crying; then Alaniz began to cry. By the end of the conversation, she told Garcia she'd pay her father back and hung up.

Garcia helped Hodgson set aside a retirement fund with his remaining savings and borrowed against that to save the house. He helped his stepfather pay back all his debts while Westgate reported the case to the Santa Clara County district attorney. In January of this year, Alaniz confessed and pleaded guilty to one count of elder-dependent-adult abuse by a caretaker and one count of grand theft. She was sentenced to four months in jail, which was reduced to house arrest and probation. She was also ordered to pay restitution.

Eleven months later, Hodgson says he hasn't seen one penny of the stolen money. "I don't know what she spent all that money on," he says, looking away and shaking his head. "Maybe she figured I'd be gone, that I was going to die anyway. ... I'm still very mad, very hurt." After evicting Alaniz, he hasn't seen her since. "She won't show her face to me," he adds.

Not only has he not seen his daughter, but he has lost touch with his grandchildren. "He really believed in her, and he has a lot of pride," Garcia says. "Imagine you turn over all your finances to somebody and find out they're screwing you--and it's your son or daughter. It's heartbreaking." Adds Garcia, "I have a two-year-old daughter, and when I look into her eyes I think, How could you ever do that to your dad?"

Such Easy Targets

What happened to Hodgson and his family is playing out with increasing frequency in Silicon Valley--and in the country--between a generation holding most of the wealth and a generation having the means--and, apparently, the desire--to steal it. With an estimated 3 million cases per year, investigators are calling financial abuse of elders "the crime of the 21st century," predicting that it's going to get much worse as the largest generation of all, the baby boom generation, heads into old age.

During the next three decades, with breakthroughs in health care, the number of Americans who live to age 65 or older is expected to double--to 70 million, with the highest growth rate among those in their 80s. California's senior population, already the largest in the nation, ahead of Florida's, is expected to almost double in size within the next two decades. Santa Clara County's population of people 65 years or older is projected to increase by 90 percent as early as 2020.

And the older generation holds most of the wealth. Currently, people 50 years and older control at least 70 percent of the nation's household worth in the form of valuable homes, property and assets acquired and saved over a lifetime.

"When baby boomers hit their golden years, there will be [a] gross dislocation of assets and dissipation of estates," if elder financial crimes aren't prevented, predicts Marc Hankin, a Los Angeles attorney who has authored several state laws protecting older citizens against financial abuse.

In Santa Clara County, where housing prices have soared over the last few decades, many seniors own their homes free and clear, and are sitting on virtual gold mines in terms of equity. "Victims are house-rich and don't have anybody watching," points out Diane Knoles, San Francisco assistant district attorney and head of the elder-and-dependent-abuse unit. "It's really open season on the elderly."

Currently, most people who steal from senior citizens are getting away with it. Investigators estimate that only one in 25 cases are reported (some think it's as low as one in 100), because of the victims' embarrassment and shame at a time in their lives when they already feel themselves slipping.

Perpetrators can be scam artists, career criminals and con men. (One example of a huge racket that targets the elderly is the infamous Canadian Lottery; see related story.) They can assume a role such as contractor or property manager. Strangers can step in as the older person's new best friend or new young spouse.

They can be unethical white-collar professionals--real estate agents, stockbrokers, attorneys, accountants or bankers--or highly trusted members of the community, such as doctors, district attorneys and judges. But more often, they are close or very well known to the older person: in-home paid caregivers or, worse, family members who exploit and betray the trust placed in them.

"Everybody has a story," says Betty Malks, head of Santa Clara County's Department of Aging and Adult Services. "This can happen in your home, to your family and, as you age, to you," she says.

"We're seeing just the tip of the iceberg," agrees Palo Alto police detective Lori Kratzer, who specializes in these kinds of cases. "As soon as you scratch the surface and start investigating a case, you may find multiple suspects and multiple crimes occurring. Elders are hit from every angle. They're such easy targets."

Ardith Vacarri knows the story from firsthand experience. "I trusted that damn fool," says the 92-year-old Vacarri from her San Jose home. "It's been such a mess. I hate to think about it."

Vacarri and her friend Raima Gerlach, 86, each lost $50,000 in 1996 to an articulate and seemingly credible man named Ted Calunod (he called himself Ted Alexander), who convinced the women and their broker that he had the investment of their dreams. He would keep their money safe and use the collateral for offshore loans, generating huge returns that they could live off of comfortably for many years to come. Instead, he put the money into an account and used it for personal expenses.

"The red flag should have been when he wouldn't take anything less than that," says Gerlach. "I blame myself. I should have seen the signs." In March, Calunod got three years in prison after a long chase, as he had no driver's license, address or job, and hadn't paid taxes. "That was a lot to lose," Vacarri says. "I needed that money to live on. I probably won't live long enough to see it [paid back]."

The Almighty Dollar

Despite the fact that retirements are lost, savings depleted and houses stolen outright, one of the biggest stumbling blocks to prosecution is that a lot of victims don't want to press charges--especially against family members or close friends.

Such was the case involving Traci Pennington and her mother, Barbara. The only daughter of a 64-year-old retired college teacher living in a retirement facility, Pennington would pick up her mother on the first of every month and force her to sign her $3,400 pension check over to her. (This went on for more than a year, starting in mid-2000.)

The mother became so strapped for cash that the other tenants took up a collection so she would have clothes to wear. She was forced to reuse her Depends diapers. Pennington, a crack addict, didn't pay the facility's bills. She finally put her mother up in a motel and was evicted. She then enrolled her mother in adult day care, only to leave her standing on the street, abandoned, in front of another facility.

"Traci was committing crimes faster than I could investigate them," says Sgt. Chris Forsyth, who investigates elder-financial-abuse cases for Contra Costa County's district attorney's office. "She used her mother as a human ATM machine."

Regardless, her mother did not want Pennington to be prosecuted, and she promised to pay back the $20,000 owed to the retirement center herself. Forsyth explained to her that the office has a zero-tolerance policy--once the case is in the district attorney's hands, it must go forward.

"She was resigned to accept it, although she cried at not seeing her grandchildren anymore," he says. Adds Forsyth, "I felt Traci was the worse kind of narcissistic, self-centered, egotistical predator I'd seen in a while. To do that to your own mother is just appalling. Such a blatant disregard for her mother's safety and well-being, all for the sole purpose of obtaining the almighty dollar." Pennington was convicted of five felonies and went to jail. Her mother recently died.

Studies show that the mistreatment or exploitation of the elderly, including the trauma of having their money and assets stolen, can push them into a severe emotional or physical decline and even cause premature death.

"I've learned that an elder's motivation to hang onto life is a very thin thread, and it doesn't take a lot to break that desire to go on living," Forsyth says. "When they lose their life savings, they're devastated and humiliated and give up. They often die within 12 to 18 months."

Pennington's case represented a classic profile: the adult child who pretends to take care of a parent but who's stealing money because of joblessness, addiction or repressed anger.

"What we see in so many cases is that the defendant feels absolutely entitled to the elder's money," says Dana Filkowski, Contra Costa County deputy district attorney in the elder-abuse prosecution unit. "They don't think anything's wrong. They believe they can manipulate the elder so there'll be no case: 'My mom will never testify against me. You'll never be able to prove it.'"

"Most kids taking money from their parents feel they deserve it, [that] they've inherited the right to the legacy," agrees Larry Pickard, supervisor of the financial-abuse unit for San Francisco's Adult Protective Services. "Fear is a big factor in these cases," he says. "Children have powerful control over the elders. They can threaten them, saying, 'If you report me, they'll take you away and put you in a nursing home.'" Many elders are terrified that one wrong decision will mean their life spirals out of control; they will be judged incompetent to handle their affairs and lose their independence.

In a recent case on the peninsula, an adult son took his 91-year-old father, who suffers from Parkinson's disease, to his savings and loan and forced him to withdraw $350,000 from his savings account and make out a check in his name. When he was caught, says his stepmother, he said, "'This is my dad's money, and he worked hard for it. And this is my money, and you have no right to it.'" She adds, "This was premeditated; he thought he would get away with it. I was enraged that he'd do something like this."

FAST Action

Despite the increase in the severity and number of these crimes, there is still limited acceptance and sympathy from the general public. As Mary Twomey from the Institute on Aging points out, it's a lot harder to get voters and lawmakers riled about protecting old people than it is about protecting women and children.

"Elder abuse is way behind domestic violence and child abuse in terms of being on anybody's radar screen," says Twomey, who is director of the Education Abuse Prevention Consortium in San Francisco. She estimates that awareness and prosecution of these kinds of crimes is behind the times at least 10 years.

Nevertheless, in 1999 the California Justice Department and then-state Sen. Bill Lockyer and Sen. John Vasconcellos decided to take a stab at prosecuting more cases of crimes against the elderly and creating new legal channels and a long list of "mandatory reporters," much as child protective services does. In addition, there are now six financial-abuse-specialist teams (FAST) in California.

Now, with strong state laws in place, if a senior aged 65 or older (or a dependent adult 18 or older) is ripped off by at least $400, it's an automatic felony. Prior acts of similar abuse can be introduced in court. Prosecutors can now videotape the victim's statement and play it to the jury.

"You have to put cases together as though the senior can't testify, so if tomorrow they have a stroke, the case doesn't have to die if the victim does," says Deputy District Attorney Dana Filkowski.

"From a criminal's standpoint, they want the victim to have wealth and not be available to testify," adds Santa Clara Deputy District Attorney Tiyen Lin. "The passage of time is fatal to a case."

Currently, Santa Clara County's FAST gets about 600 reports a year--more than any other county in the state. The 3-year-old group has handled close to 1,000 cases, says Jamie Buckmaster, FAST manager at Adult Protective Services. The cases range from things as seemingly small as stolen social security checks to a recent $11 million theft from an aged widow living in Santa Clara County. Its approach is aggressive: respond quickly and freeze assets (with a conservatorship), often within hours of a report, in order to save cash, property, stocks and bonds from being ripped off.

"No matter who the perpetrator is, we'll go after them, and if there's a crime of financial abuse we'll put them in prison," says Betty Malks.

One large case the FAST team recently prosecuted involved a complex theft targeting Leota McCulla, a widow in her 80s with a history of mental illness. McCulla hired a man to manage several apartment buildings she owned when she moved out of the area to live near her family.

The hired manager, Joseph Scott, drafted a power of attorney and a trust, and forged McCulla's signature on a document that gave him apparent authority to take out loans against her estate. With the help of a real estate agent and broker, title companies, notaries and an attorney, Scott was able to take out 17 loans on her properties for $2.2 million, netting $1.6 million, which he put into a personal account.

"She loved him like a son; she totally trusted him," says Cindy Hendrickson, Santa Clara County deputy district attorney in the elder-fraud unit. "She had loaned him money for a house down payment already, but he went way beyond that. When we explained to her what he had done, she started to cry. She asked, 'How much money do I have?' She had $100."

The county counsel immediately petitioned the court to have the public guardian become the conservator of McCulla's estate. A private law firm filed a civil suit against the real estate broker, all 17 lenders, 50 assignees, the title companies and the attorney. Scott was charged with four felony counts of grant theft, embezzlement and elder-abuse fraud. He pleaded guilty to one felony count and was sentenced to four years in prison. The court was able to recover more than $1 million from a total of 99 defendants. (The tip-off was a call from Scott's ex-wife's attorney, who noticed the excess cash while rifling through divorce papers.)

This case exemplifies two problem areas. There's little or no monitoring of financial documents such as power of attorney, home deeds and joint bank accounts that are easily abused by perpetrators. Also, professionals--real estate agents, accountants, bankers and the like--are often not trained to catch the red flags of suspicious transactions and end up facilitating crimes by turning a blind eye, not asking questions or not alerting family members. Sometimes, they simply don't want to risk losing a fat commission or a longstanding client.

Banking is a particular problem. "If an elderly person is eating the wallpaper in the bank and is telling the teller to take out the money so he can give it to Harvey here who's pulling a needle out of his arm, they don't have to do anything. They can turn it right over to them and act like [the senior] is competent," says attorney Marc Hankin. "Bankers protect themselves from liability by failing to assess the competency of a client to make financial decisions."

Civil Mirage

The question of competency--whether the senior is capable of making sound decisions about money--is at the heart of many of these cases. "Initially, it appears there's a willing victim who participates in these transactions," says retired L.A. police detective Chayo Reyes, an expert in the field who created the country's first elder-financial-abuse specialist team. "Suspects always say that the senior knew what they were doing, wanted them to have it and that everything was legal. You need to address the person's ability to give consent. I call it a civil mirage."

Though investigators evaluate the victim's ability to manage money and understand consequences, these determinations can be tricky. "There's a thin line between self-determination and exploitation," says Betty Malks. "We never want to cross that line."

Most fraud occurs when the senior is a "high-functioning incompetent," says Hankin. These are elderly who can pretend that they're doing well by relying on earlier social skills and are better at hiding their dementia from themselves and from others. "Perpetrators can sniff these people out like bloodhounds," he says.

Perpetrators, whether family members or con men, prey on older people's infirmity and loneliness. Elderly women are especially susceptible, as many from their generation are unused to handling finances.

"We see a really ugly side of humanity," says Deputy District Attorney Cindy Hendrickson. "For people who commit fraud against vulnerable people like the elderly, it takes a certain moral depravity, a cunning mind. And since the fraud usually takes place over years, they have multiple times to reflect and reconsider."

The toughest cases are those that involve what's called undue influence: when a con artist exerts psychological pressure to brainwash another person and gain control over his or her life. The goal is to exploit the trust, fear and dependency of the older person so the con man can be named as the sole beneficiary of the will or gain access to accounts, trusts or the home deed.

According to Berkeley clinical psychologist Margaret Singer, an expert on cults, brainwashing and persuasion, crooks can isolate seniors, manipulate their memory, deprive them of food or medication, or create a "siege mentality," giving the older persons the illusion that enemies are lurking around every corner. Seniors can also become subject to the Stockholm Syndrome, she says--identifying with the perpetrator and feeling deeply grateful that things aren't even worse.

"Tricksters come in all brands, ages and backgrounds," Singer says. Besides the textbook psychopaths and sociopaths, "it's just plain greed and character defects."

Undue influence can be hard to prove in elder-financial-abuse suits, as there are no published criminal cases and no relevant statutes. "There's no agreement among prosecutors [about] what it is," says Deputy District Attorney Dana Filkowski. "Sending someone to prison because they've been too persuasive is really hard; it's a difficult concept with a jury."

Some legal experts caution that prosecutors who proceed with a reluctant or opposing victim risk infringing their rights to self-determination.

"One person's elder exploitation may be another person's way of combating loneliness and old age and making sure their needs are met," says Jan Rein, a law professor with McGeorge School of Law at the University of the Pacific in Sacramento. "How do you draw the line between incapacity and eccentricity, or just not marching to the same drummer as the rest of society?"

Rein adds that while prosecution of elder financial crimes is a critical piece, the situations tend to be complex, and in many cases, the damage is already done. "My concern is that we always think we can fix things through the criminal justice system," she says. "It should play a role, but we shouldn't lose sight of the need to prevent the abuse in the first place, which involves public resources, educating elders and helping alleviate loneliness, which I believe is the one of the biggest causes of financial exploitation."